top of page

SAZH-TAF Report on FDI

Literature Review - Current FDI Regime in Pakistan: Policy & Statutory

Pakistan has implemented its long-term goal of protecting and promoting foreign investment by incorporating it in its policy framework. The country’s investment policies are reflective of its aim to attract greater FDI. Thus, the rights and interests of foreign investors have also been protected in Pakistan’s statutory framework. A significant act of Parliament regarding foreign investment is the Foreign Private Investment (Promotion and Protection) Act, 1976. This Act played a key role in liberalizing Pakistan’s economic policy by allowing foreign investors “…to open foreign currency accounts for purchase of any assets for the production, distribution, providing of services, and extraction of mineral resources.” (Khan et al., 2020). It offered concessions in income and wealth taxes, while making the state treat foreign investment in a comparable way to any other investment in the country.


Additionally, under Section 8 of the Protection of Economic Reforms Act, 1992, the State provides legal cover, deregulation, and fiscal incentives for foreign investment in Pakistan. It has eased procedural requirements to encourage foreign capital by placing minimum restrictions in the process. It allows foreign investors to open foreign currency accounts without being subject to wealth, zakat, and income tax deductions, and without having to declare their source of money.


Also, the Board of Investment (BOI) Ordinance 2001 played a significant role in attracting foreign investment by introducing a one window operations to ease foreign investment transactions. Some other functions of this Board include to identify investment initiation, offer recommendations for new incentives and to constantly be in touch with relevant ministries and departments regarding investment policy related matters. “The administrative, financial, and management decisions affecting foreign investments were communicated to foreign private investors to keep them informed (BIO, 2001).” (Khan et al., 2020)


The following is a non-exhaustive list of important pieces of legislation that directly impact foreign acquisitions and investment in Pakistan:

  • Foreign Exchange Regulation Act 1947 (FERA 1947);

  • Foreign Private Investment (Protection and Promotion) Act 1976 (FIPPA 1976);

  • Protection of Economic Reforms Act, 1992;

  • Foreign Exchange Manual (the FE Manual);

  • The Board of Investment (BOI) Ordinance 2001;

  • Companies Act, 2017 (CA 2017);

  • Competition Act, 2010 (CA 2010);

  • Securities Act, 2015 (SA 2015);

  • Banking Companies Ordinance 1962 (BCO);

  • Public Private Partnership Act, 2017;

  • Special Economic Zones Act, 2012;

  • the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations 2017; and

  • the Competition (Merger Control) Regulations 2016 (the Merger Control Regulations).


Pakistan has ratified numerous agreements in the global attempt to facilitate and promote foreign investment. It signed two agreements in this regard through the Organization of the Islamic Conference (OIC) and Economic Cooperation Organization (ECO). The following is a non-exhaustive list of International treatises, conventions, and agreements that Pakistan is a signatory to, for the purposes of facilitating and encouraging greater foreign investment:

  • ICSID Convention, 1966, (Ratified in 2011);

  • New York Convention, 1959, (Ratified in 2005)

  • Agreement on Promotion, Protection and Grantee OIC, 1986;

  • Economic Cooperation Agreement (ECO), 2005;

  • South Asian Regional Free Trade Agreement, 2006.

bottom of page